SKOE: A Korean JDSU in the Making?
ATLANTA -- OFC 2003 -- Is the shakeout that’s occurring in the optical components market creating an opportunity for a totally new entity -- another JDSU -- to emerge as a big player?
One of Korea’s big industrial conglomerates -- SK Group -- appears to think so and has used the OFC Conference to (quietly) announce that it’s taking on the challenge, via a company it set up about a year ago called SK Opto-Electronics Inc.
SK Opto-Electronics, or SKOE, is aiming to become a world leader in optical components and modules, by combining Korean expertise in manufacturing automation with low-cost production facilities in China, while having sales and marketing based in the U.S., according to Suk Youn Suh, SKOE’s CEO.
SKOE is already offering a complete portfolio of products -- or, at least, products for which there’s likely to be a mass market. “What we’re shooting for is the low-cost mainstream,” says Gavin R. Blackett, SKOE’s VP of global marketing.
The goal is to target big system vendors with a one-stop-shop for components, and to work closely with these vendors to give them the best deal in terms of cost and reliability. “We’re going to open up our cost structure to our customers and work with them to drive costs down,” says Blackett.
SKOE is divided into six technology divisions:
- Sample products include 2.5-Gbit/s transmitter optical sub assemblies (TOSAs) and the corresponding receiver optical sub assemblies (ROSAs)
- Sample products include various types of filters
- Sample products include single and multichannel variable optical attenuators (VOAs) and optical switches
- Sample products include splitters and couplers, fiber arrays and erbium-doped waveguide arrays (EDWAs)
- Sample products include various switches and VOAs
- Sample products include a range of transponders and an optical add/drop mux
All of these products are home-grown, according to Suh, who says SKOE has inherited a substantial amount of intellectual property from other companies in the SK Group.
SKOE probably has a captive customer back home in Korea, where the SK Group has also created a systems vendor called SK Telesys, which no doubt is a supplier to SK Telecom, one of Korea’s biggest wireless telecom operators, with annual revenues of $8 billion.
In this respect, SKOE is nothing like JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), whose very foundation rested on the fact that system vendors needed an independent supplier of components. If SK Telesys turns into another Huawei Technologies Co. Ltd., this could become a big issue.
In fact, incumbent vendors of components and modules think SKOE faces an uphill task persuading big system vendors to take a risk with an unknown and unproven Korean supplier.
“Best of luck to them,” says Harry Bosco, president and CEO of Opnext Inc.. Big system vendors like Cisco Systems Inc. (Nasdaq: CSCO) and Siemens Information and Communications Networks Inc. have long-standing, deep relationships with their suppliers, whose components are designed into their products. “They’re not going to kick somebody out and put somebody else in,” says Bosco.
JDSU says it’s not come across SKOE as a competitor, and it questions whether SKOE will be able to drive down costs significantly, bearing in mind that JDSU itself makes use of low-cost labor in Chinese manufacturing facilities.
All the same, SKOE thinks its got an edge, partly because its parent has got deep pockets and it can afford to wait out the current recession. “We’ll be ready when volumes increase,” says Suh.
— Peter Heywood, Founding Editor, Light Reading
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